Nikkei gains on tech recovery

Samsung gains after results, boosting chip issues

By

OsamuTsukimori

TOKYO (CBS.MW) - The Nikkei Average erased early losses to close slightly higher Friday as chip-related issues rose in the wake of earnings results from Samsung Electronics and moderate growth data from China.

"High-tech stocks recovered after Samsung Electronics' earnings came mostly in line with expectations," said Tetsuya Ishijima, investment strategist at Okasan Securities. "The news that China's economy did not grow more than 10 percent in the second quarter also eased concerns about monetary tightening in China and boosted sentiment."

The Nikkei Average ended up 26.86 points, or 0.2 percent, at 11,436.00. The index gained 0.1 percent for the week.

The broader Topix added 0.04 point to 1,151.16, bringing the gain for the week to 0.4 percent.

Japanese markets will be closed Monday for a national holiday.

Tech stocks in Tokyo pared losses after Samsung Electronics, the world's largest memory chip maker and third-biggest mobile phone maker, said Friday its second-quarter net profit jumped to 3.13 trillion won ($2.68 billion) from 1.13 trillion won a year earlier. See full story.

"The increase in capital expenditure helped boost the outlook for Japanese semiconductor-related shares because the market had expected such investments to fall in the sector," said Nagayuki Yamagishi, senior strategist at UFJ Tsubasa Securities.

Other regional markets were also mostly firmer, also helped by Samsung's results.

China's Shanghai Composite index was up 2.4 percent. Gross domestic product rose 9.6 percent on year in real terms in the second quarter, slightly down from the first quarter's 9.8 percent, the government said in Beijing, providing evidence that steps to cool the economy are working. See full story.

Taiwan's Weighted Average index fell 0.7 percent.

Japanese shares

In the banking sector, UFJ Holdings (8307)
UFJHF
fell 2.7 percent, while Mitsubishi Tokyo Financial Group (8306)
MTF, +0.21%
tumbled 8.7 percent. The two will reportedly announce later Friday that they will merge to create the world's largest financial group.

Sumitomo Trust & Banking Corp. (8403)
STBUF
added 3.8 percent after reports that the bank decided to seek an injunction to halt the merger talks between UFJ and Mitsubishi-Tokyo. Earlier this week, UFJ said it would scrap its signed agreement to sell its UFJ Trust Bank unit to Sumitomo Trust, due to the latest merger proposal.

Sony (6758)
SNE, -4.54%
fell 0.5 percent. Its joint venture with Ericsson
ERICY
on Thursday said it swung to a net profit in the second quarter helped by a 34 percent year-on-year surge in sales. See market pulse.

Honda Motor (7267)
HMC, -1.84%
lost 0.4 percent. The automaker on Thursday said it has established a wholly owned subsidiary in the U.S. as part of its efforts to enter the aircraft jet engine business.

Mitsubishi Motors (7211)
MMTOF, -0.07%
plunged 17.5 percent. The Nihon Keizai Shimbun reported Friday that the troubled automaker will assign 300 more employees to handle its recalls and faulty parts exchanges. The company has completed raising a total 496 billion yen ($4.51 billion) from the Mitsubishi group and other investors, obtaining what it called enough funds to "vigorously implement" its revitalization plan. See full story.

Gainers outnumbered decliners 937 to 484 on the First Section of Tokyo Stock Exchange. Volume edged down to 1.109 billion shares from Thursday's 1.122 billion.

Next week, the Nikkei Average has the potential to aim for 11,600, or possibly as high as 11,800, considering, among other things, the low price/earnings ratio in tech shares following the recent slump, said Yamagishi of UFJ Tsubasa.

For example, Tokyo Electron's P/E was at 18.9, while Advantest's stood at 18.1 even after today's gains, he added.

The dollar traded at 109.62 yen in late Tokyo, compared with 109.78 yen late Thursday in the U.S.

Asia movers

LG Electronics
LGEAF, +0.00%
was up 3.3 percent after its joint venture with Philips Electronics of the Netherlands, LG.Philips LCD, raised $1 billion in its initial public offering. It priced 49.9 million American depository shares at $15 each, at the bottom of its $15 to $18 range. The company also sold 8.6 million shares for 34,500 won ($29.61) each in Korea. It shares are set to trade on the New York Stock Exchange on July 22 and in Seoul the following day.

Hana Bank
HANQF
was up 0.8 percent after Standard & Poor's Ratings Service on Friday raised the long-term credit rating for the country's third-biggest lender to "BBB+" from "BBB".

In Singapore, Singapore Airlines
SPAAF
was up 0.9 percent. The government of Singapore has turned down the airline's request for more flights to China due to the entry of new Singapore carriers, the Straits Times reported.

In Hong Kong, Hutchison Whampoa (13)
HUWHY
was up 1.5 percent. The diversified conglomerate said Thursday that subscribers for its third-generation mobile phone service in Italy has reached 1 million, 16 months after the launch of its video mobile phone 3, Dow Jones reported.

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